Freeport McMoRan’s first quarter revenue cut in half

Overall production was up and gold revenues from its Grasberg operations in Indonesia completely offset production costs, but Freeport McMoRan Copper & Gold (FCX-N) still posted a significant drop in revenue and profits in the first quarter of the year.

Revenues plunged to US$2.6 billion from US$5.67 billion in the year-earlier quarter while net earnings dropped to US$43 million, or 11¢ per share, down from US$1.1 billion, or US$2.64 per share, in the same quarter in 2008.

Weaker metal prices and demand were to blame for the world’s largest publicly traded copper company’s poor results. And even though the first quarter brought a small uptick in the price of copper, which climbed to US$1.84 per lb. from US$1.42 per lb., the metal was still selling well below the US$3.83 per lb. it commanded a year ago.

Consolidated sales reached 1 billion lbs. copper (12% higher than the 911 million lbs. copper in the year-earlier quarter), 545,000 ounces of gold (nearly twice the 280,000 ounces in the year-ago quarter) and 10 million lbs. molybdenum (half the amount of last year’s 20 million lbs.)

Unit site production and delivery costs averaged US$1.07 per lb. copper in the first quarter, 27% lower than the US$1.47 in the first quarter of 2008 and 29% lower than the 2008 average of US$1.51 per lb. First quarter unit net cash costs, after by-product credits, came in at 66¢ per lb.

Freeport estimates that at an average price for the rest of the year of US$2 per lb. copper, US$900 per oz. gold and US$8 per lb. molybdenum, unit net cash costs should average about 70¢ for all of 2009.

Total debt reached about US$7.2 billion while consolidated cash totaled US$644 million as of Mar. 31, 2009.

The company also reported it had made significant progress on the construction of its Tenke Fungurume copper and cobalt project in the Democratic Republic of Congo. Freeport owns 57.75% in the project, which produced its first copper cathode in late March.

The DRC government is currently reviewing Freeport’s contract but the company says it complies with Congolese law and the review is not affecting the development schedule or production plans for the Tenke Fungurume project.

The DRC is reviewing the contracts of other companies, as well, including: AngloGold Ashanti (ANGJ-J, AU-N) Banro (BAA-T), First Quantum (FM-T, FQM-L), Gold Fields (GFI-J, GOF-L), and Mwana Africa (MWA-L).

At presstime Freeport was trading at US$42.58 per share.

Over the last 52 weeks the company, based in Phoenix, Arizona, has traded in a range of US$15.70-US$127.24 per share.

The company has 411.7 million shares outstanding.